The PRIMARY OIC ruling behind Islamic home finance — the International Islamic Fiqh Academy (OIC), Resolution No.
The PRIMARY OIC ruling behind Islamic home finance — the International Islamic Fiqh Academy (OIC), Resolution No. 40-41 (2/5 & 3/5), 'Discharging of Promise and Murabaha for the Orderer of Purchase' (the Academy's own website titles it 'Keeping a Promise and Murābaḥah to the Purchase Orderer'), adopted at the Academy's 5th session in Kuwait City, State of Kuwait, 1-6 Jumādā al-Ūlā 1409H (10-15 December 1988). This is the corpus's SIXTH article anchored on a genuine PRIMARY OIC / IIFA resolution read verbatim, and the primary anchor for the exact contract most riba-free home-finance plans are built on: murabaha-to-the-purchase-orderer, where a bank buys the house first and then re-sells it to you at a disclosed mark-up. The resolution settles the three questions that separate a genuine such sale from a disguised interest loan. FIRST, on the two-stage structure, verbatim: 'Murabaha sale by purchase orderer is permissible on goods already in the physical possession of the seller, as required by Shari'a, provided the seller carries the risk of loss before delivery or the consequences of returning the purchased goods because of concealed defects or any other reasons justifying the return of the goods after their reception, provided the conditions of the sale are met and with the absence of any impediments.' — i.e. the bank must actually own the asset and bear its ownership risk before selling it on; it cannot sell you what it does not yet possess. SECOND, on your promise to buy, verbatim: 'According to Shari'a, a promise (made unilaterally by the purchase orderer or the seller), is morally binding on the promisor, unless there is a valid excuse. It is however legally binding if made conditional upon the fulfillment of an obligation, and the promisee has already incurred expenses on the basis of such a promise. The binding nature of the promise means that it should be either fulfilled or a compensation be paid for damages caused due to the unjustifiable non fulfilling of the promise.' THIRD, on a two-sided binding promise, verbatim: 'Mutual promise (involving two parties) is permissible in the case of Murabaha sale provided that the option is given to one or both parties. Without such an option, it is not permissible, since in Murabaha sale, mutual and binding promise is like an ordinary sale contract, in which the prerequisite is that the seller should be in full possession of the goods to be sold, in order to be in conformity with the Hadith of the Prophet (PBUH) forbidding the sale of anything that is not in one's possession.' Together these three clauses are the fiqh line that a real Islamic home-purchase plan has to stay on the right side of: the financier owns and risks the property first (not a loan), the customer's promise to buy is binding enough to make the deal workable but is a PROMISE not the sale itself, and the two parties may not lock in an unconditional bilateral sale before the bank owns the house.
What this source says
Almost every riba-free way to buy a home in Australia, Britain, Canada or the United States that is NOT a diminishing-partnership (musharakah mutanaqisah) or a lease-to-own (ijarah) is built on one contract: murabaha to the purchase orderer — murabahah lil-amir bish-shira'. You find the house. The financier buys it. The financier then sells it to you at the price it paid plus a disclosed, agreed mark-up, which you repay in fixed instalments. Done honestly, this is a genuine sale of an asset the bank actually owned, and the mark-up is a trading profit, not interest. Done as a paperwork trick — where the bank never really owns or risks the property and the 'mark-up' is just an interest rate wearing a costume — it is a disguised riba loan. The line between the two is exactly what the International Islamic Fiqh Academy of the OIC drew at its 5th session in Kuwait City over 1-6 Jumādā al-Ūlā 1409H (10-15 December 1988), in Resolution No. 40-41 (2/5 & 3/5), titled in the Academy's official printed edition 'DISCHARGING OF PROMISE AND MURABAHA FOR THE ORDERER OF PURCHASE' (its own website titles the same ruling 'Keeping a Promise and Murābaḥah to the Purchase Orderer'). Like the Academy's other finance resolutions it is a collective-ijtihad ruling of the OIC's supra-madhab body of assembled senior scholars, which is why it can speak for the practice of the whole Muslim world rather than one school. The resolution answers three questions, and each one is load-bearing for whether a home-finance product is the real thing.
The FIRST clause fixes the STRUCTURE. Verbatim: 'Murabaha sale by purchase orderer is permissible on goods already in the physical possession of the seller, as required by Shari'a, provided the seller carries the risk of loss before delivery or the consequences of returning the purchased goods because of concealed defects or any other reasons justifying the return of the goods after their reception, provided the conditions of the sale are met and with the absence of any impediments.' Read what this demands. Before the bank can sell you the house, the bank must actually possess it 'as required by Shari'a', and — the operative test — the bank must 'carry the risk of loss before delivery' and stand behind it for defects after delivery. That risk-bearing is not a technicality; it is the whole difference between a trader and a lender. A lender advances money and is owed it back whatever happens to the asset. A trader owns a thing, bears the danger that it burns down or turns out defective while it is theirs, and earns a profit for taking that risk. The clause insists the financier be the second, not the first. If a 'murabaha' is papered so that the customer bears every risk from the very start and the bank is never really exposed to the property at all, it fails this clause — it is a loan, and its mark-up is riba.
The SECOND clause fixes the PROMISE — and this is the subtle one. For the two-stage sale to work commercially, the bank needs some assurance that after it buys the specific house you asked for, you will actually go through with buying it from them; otherwise the bank is left holding a property it never wanted. The instrument for that assurance is your PROMISE (wa'd) to purchase. The Academy rules, verbatim: 'According to Shari'a, a promise (made unilaterally by the purchase orderer or the seller), is morally binding on the promisor, unless there is a valid excuse. It is however legally binding if made conditional upon the fulfillment of an obligation, and the promisee has already incurred expenses on the basis of such a promise. The binding nature of the promise means that it should be either fulfilled or a compensation be paid for damages caused due to the unjustifiable non fulfilling of the promise.' Three moves are packed in here. (a) A one-sided promise is at minimum MORALLY binding — you should keep it before God unless you have a genuine excuse. (b) It can be made LEGALLY (court-enforceable) binding, but only under conditions: it must be conditional upon a cause AND the other side must have actually acted on it and incurred expense — here, the bank going out and buying the house because you promised to buy it from them. (c) The teeth of a binding promise are that you either honour it or pay COMPENSATION for the actual damage your unjustified breach caused — not a penalty, and crucially not the profit the bank expected, but real loss. This is what lets an Islamic bank commit its own capital to buy your house without the arrangement collapsing at your whim, while stopping short of treating the promise as if the sale had already happened.
The THIRD clause guards the line the second clause could otherwise blur. If BOTH sides give an unconditional, fully binding promise — the customer bound to buy and the bank bound to sell, with no way out — then, economically, you have already contracted the sale. And you cannot have contracted the sale of a house the bank does not yet own. The Academy rules, verbatim: 'Mutual promise (involving two parties) is permissible in the case of Murabaha sale provided that the option is given to one or both parties. Without such an option, it is not permissible, since in Murabaha sale, mutual and binding promise is like an ordinary sale contract, in which the prerequisite is that the seller should be in full possession of the goods to be sold, in order to be in conformity with the Hadith of the Prophet (PBUH) forbidding the sale of anything that is not in one's possession.' So a two-sided (bilateral) binding promise — muwa'adah — is allowed ONLY if at least one party keeps a genuine option (khiyar) to walk away; the moment both are irrevocably locked in, the 'promise' has become the sale itself, and it is void because the bank is selling what it does not yet possess — the very thing the Prophet's reported prohibition on selling what one does not have forbids. (That prohibition is quoted here in the resolution's own words; this entry assigns it no hadith number and adds nothing the resolution does not say.) The distinction is exact and it is the heart of the modern debate: a binding unilateral promise from the customer is acceptable; a binding bilateral lock-in that pre-consummates the sale is not.
Why does this resolution matter so much for the everyday question 'is this Islamic mortgage really halal'? Because it gives you three concrete tests you can put to any murabaha home-finance product, straight from the highest supra-madhab authority: (1) STRUCTURE — does the financier genuinely buy the property and bear the ownership risk (loss, defects) before selling it to me, even if only for a legal moment? If the bank never owns or risks the house, it is a loan. (2) PROMISE — is what I sign a binding PROMISE to purchase (enforceable at most by compensation for the bank's actual loss), or is it dressed up as the sale itself before the bank owns anything? A promise is fine; a pre-signed sale is not. (3) OPTION — in any two-sided commitment, does at least one party keep a real right to withdraw, or are both irrevocably bound from the outset? An unconditional bilateral lock-in collapses the two stages into one illegitimate sale. A product that passes all three is doing what this resolution permits; one that fails any is, on the Academy's reasoning, closer to a loan with interest wearing the costume of a sale.
Two honest limits belong on this entry. First, on SOURCES: this is one resolution confirmed across two authoritative publications — the IRTI/IDB official printed edition of the Academy's resolutions (1985-2000), from which the full verbatim clauses above are taken, and the Academy's own live website page for the same numbered ruling. These are not two fully independent translations; the promise clause in particular reads near-identically in both, so they share translation lineage rather than being wholly separate renderings. What the second publication secures is not linguistic independence but that the numbered ruling, its date, and its operative substance are real and correctly attributed — and where the two differ, the printed official edition is the fuller and is used as the primary text. Second, on SCOPE: the resolution also carries two Recommendations (that Islamic banks extend their activity to real economic development — industrial and commercial projects, equity participation — and that they study the practical safeguards of murabaha in application); those are named here as recommendations, not asserted beyond what the printed edition states. No madhab-by-madhab breakdown, no vote tally, no market or AUM figure, no hadith number, and no other resolution number is claimed beyond what the two sources state — only the verbatim clauses and their plain application to home finance.
Wording inside quotation marks is quoted from the source. The rest is this notebook’s summary of it — read the original before relying on it.
Provenance
- Compiled from
- Compiled 2026-07-08 from two authoritative publications of the SAME primary resolution, cross-read: [1] the IRTI/IDB OFFICIAL PRINTED EDITION 'Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000' (Islamic Research and Training Institute, Islamic Development Bank), which prints the resolution in full as 'RESOLUTION N° 40-41 (2/5 & 3/5) CONCERNING DISCHARGING OF PROMISE AND MURABAHA FOR THE ORDERER OF PURCHASE', with the session line 'holding its Fifth session, in Kuwait-City (State of Kuwait), from 1st to 6th Jumada al-Oula 1409 H (10 to 15 December 1988)' and the three numbered operative clauses plus the two Recommendations — extracted verbatim from the published PDF text; and [2] the International Islamic Fiqh Academy's own website page 'Keeping a Promise and Murābaḥah to the Purchase Orderer' (iifa-aifi.org/en/32332.html), which confirms the identical resolution number/parenthetical (40-41, 2/5 and 3/5), the identical 5th session / Kuwait City / 1-6 Jumādā al-Ūlā 1409H (10-15 December 1988), and the same operative substance. HONEST DISCLOSURE OF SOURCE RELATIONSHIP: these are two publications of one resolution, not two fully independent translations — the promise clause in particular reads near-identically across both (both say the promise is 'morally binding on the promisor, unless there is a valid excuse' and, if conditional and the promisee 'has already incurred expenses', is 'legally binding'), so they share translation lineage rather than being wholly separate renderings. Where they differ, the printed IRTI edition is FULLER: it carries the First clause's risk-of-loss / concealed-defects detail and the Third clause's full reasoning ('like an ordinary sale contract ... the seller should be in full possession of the goods to be sold ... the Hadith of the Prophet (PBUH) forbidding the sale of anything that is not in one's possession'), which the website excerpt abbreviates. The printed official edition is therefore taken as the primary verbatim anchor here, with the Academy's own live page as the confirming publication of the same numbered ruling.
- Source
- PRIMARY RULING (full title, session/city/date, and the three numbered operative clauses plus the two Recommendations) from [1] the IRTI/IDB OFFICIAL PRINTED EDITION, 'Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000' (Islamic Research and Training Institute, Islamic Development Bank, Jeddah), printing the ruling as 'RESOLUTION N° 40-41 (2/5 & 3/5) CONCERNING DISCHARGING OF PROMISE AND MURABAHA FOR THE ORDERER OF PURCHASE', 'holding its Fifth session, in Kuwait-City (State of Kuwait), from 1st to 6th Jumada al-Oula 1409 H (10 to 15 December 1988)' — extracted verbatim from the published PDF (hosted at https://zulkiflihasan.wordpress.com/wp-content/uploads/2009/12/majma-fiqh.pdf), read 2026-07-08. VERBATIM clauses: FIRST 'Murabaha sale by purchase orderer is permissible on goods already in the physical possession of the seller, as required by Shari'a, provided the seller carries the risk of loss before delivery or the consequences of returning the purchased goods because of concealed defects or any other reasons justifying the return of the goods after their reception, provided the conditions of the sale are met and with the absence of any impediments.'; SECOND 'According to Shari'a, a promise (made unilaterally by the purchase orderer or the seller), is morally binding on the promisor, unless there is a valid excuse. It is however legally binding if made conditional upon the fulfillment of an obligation, and the promisee has already incurred expenses on the basis of such a promise. The binding nature of the promise means that it should be either fulfilled or a compensation be paid for damages caused due to the unjustifiable non fulfilling of the promise.'; THIRD 'Mutual promise (involving two parties) is permissible in the case of Murabaha sale provided that the option is given to one or both parties. Without such an option, it is not permissible, since in Murabaha sale, mutual and binding promise is like an ordinary sale contract, in which the prerequisite is that the seller should be in full possession of the goods to be sold, in order to be in conformity with the Hadith of the Prophet (PBUH) forbidding the sale of anything that is not in one's possession.' CONFIRMING PUBLICATION (same numbered ruling on the Academy's own site, confirming the resolution number 40-41 (2/5 and 3/5), the 5th session, Kuwait City, and the 1-6 Jumādā al-Ūlā 1409H / 10-15 December 1988 date, and the same operative substance including the morally-binding/legally-binding promise distinction and the mutual-promise-needs-an-option rule): [2] the International Islamic Fiqh Academy (OIC), 'Keeping a Promise and Murābaḥah to the Purchase Orderer' (https://iifa-aifi.org/en/32332.html), read 2026-07-08. HONEST SOURCE-RELATIONSHIP NOTE: these are two publications of ONE resolution, not two fully independent translations — the promise clause reads near-identically in both, so they share translation lineage; the printed IRTI edition is the fuller (it carries the First clause's risk/defect detail and the Third clause's full possession-Hadith reasoning that the website abbreviates) and is used as the primary verbatim anchor, with the website confirming correct attribution of the numbered ruling. NO fabrication: no madhab-by-madhab tally, no vote count, no hadith number, no other resolution number, and no market/AUM/named-bank figure is asserted — only what the two publications state verbatim.
- School / basis
- Cross-madhab / collective-ijtihad (the International Islamic Fiqh Academy of the OIC is a supra-madhab body of assembled senior scholars; its resolutions represent collective ijtihad rather than a single school's position). Resolution No. 40-41 (2/5 & 3/5), 5th session, Kuwait City, State of Kuwait, 1-6 Jumādā al-Ūlā 1409H / 10-15 December 1988. Operative content, verbatim from the IRTI/IDB official printed edition: FIRST — 'Murabaha sale by purchase orderer is permissible on goods already in the physical possession of the seller, as required by Shari'a, provided the seller carries the risk of loss before delivery or the consequences of returning the purchased goods because of concealed defects or any other reasons justifying the return of the goods after their reception, provided the conditions of the sale are met and with the absence of any impediments.' SECOND — 'According to Shari'a, a promise (made unilaterally by the purchase orderer or the seller), is morally binding on the promisor, unless there is a valid excuse. It is however legally binding if made conditional upon the fulfillment of an obligation, and the promisee has already incurred expenses on the basis of such a promise. The binding nature of the promise means that it should be either fulfilled or a compensation be paid for damages caused due to the unjustifiable non fulfilling of the promise.' THIRD — 'Mutual promise (involving two parties) is permissible in the case of Murabaha sale provided that the option is given to one or both parties. Without such an option, it is not permissible, since in Murabaha sale, mutual and binding promise is like an ordinary sale contract, in which the prerequisite is that the seller should be in full possession of the goods to be sold, in order to be in conformity with the Hadith of the Prophet (PBUH) forbidding the sale of anything that is not in one's possession.' RECOMMENDS (named, not further quoted): that Islamic banks extend their activity to real economic-development mechanisms (industrial/commercial projects, equity participation), and that they study the practical safeguards of murabaha in application. Load-bearing for THIS site as the PRIMARY OIC anchor of the contract behind most riba-free home-finance plans (murabaha to the purchase orderer): it fixes the two-stage structure (financier must own and bear risk before re-selling), the status of the customer's promise (a binding wa'd enforceable at most by compensation for actual loss, not the sale itself), and the limit on bilateral lock-in (an unconditional two-sided binding promise is a disguised sale of what one does not possess and is impermissible). Distinct from the corpus's generic murabaha entry (which explains the contract mechanics) and its wa'd entry (which explains promise machinery) — this is the primary RESOLUTION that rules on both together. Presented faithfully to scope: no madhab-by-madhab breakdown, no vote tally, no hadith number (the possession prohibition quoted in the resolution's own words), no market/AUM figure, and no other OIC/AAOIFI resolution number asserted; only the clauses verified verbatim in the two publications are claimed. Honest source note: the two publications share translation lineage (the promise clause reads near-identically); the second secures correct attribution of the numbered ruling, not linguistic independence.
- Captured
- 2026-07-08
- Added
- 2026-07-08
- Trust
- Primary or near-primary source with a stable public URL.
Compiler’s note
The corpus's SIXTH article anchored on a genuine PRIMARY OIC / International Islamic Fiqh Academy resolution read verbatim, and the FIRST primary-OIC anchor on the murabaha / home-finance SALE side (the existing primary-OIC seam ran Resolution No. 10 = financing interest is riba, No. 86 = current account is a loan and interest on it is riba, No. 179 = organised tawarruq prohibited, No. 222 = current-account perks that draw a benefit are riba; this adds the ruling on the specific contract that riba-free HOME finance is actually built on). WHY THIS ONE: the site's whole halal-housing spine (musharakah mutanaqisah + ijarah + murabaha) leans on murabaha-to-the-purchase-orderer, yet the corpus had only a generic murabaha explainer and a generic wa'd (promise) explainer, and no primary RESOLUTION ruling on the two together. Resolution 40-41 is exactly that ruling, and it is the one that gives an ordinary reader three concrete halal-tests for any 'Islamic mortgage' product: (1) does the financier truly own and bear the risk of the property before re-selling (structure, not a loan); (2) is the customer's commitment a binding PROMISE enforceable only by compensation for actual loss, or is it a pre-consummated sale; (3) in any two-sided commitment does at least one party keep a real option (khiyar), since an unconditional bilateral lock-in is a disguised sale of what one does not yet possess. Grep-confirmed distinct before writing: `ls content/articles | grep -iE '40|41|orderer|promise|discharg'` returned only the existing wad entry, and a content grep for '40-41'/'purchase orderer'/'orderer of purchase' returned nothing — distinct from murabaha-cost-plus-sale (contract mechanics) and wad-promise-undertaking (promise machinery). TWO authoritative publications of the SAME resolution cross-read: [1] the IRTI/IDB OFFICIAL PRINTED EDITION 'Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000', full verbatim clauses extracted directly from the published PDF; and [2] the Academy's own live page iifa-aifi.org/en/32332.html confirming the numbered ruling/date/substance. HONEST DISCLOSURE (built into title/author/source/madhab): these are two PUBLICATIONS of one resolution, NOT two fully independent translations — the promise clause reads near-identically across both, so they share translation lineage; the second source secures correct attribution rather than linguistic independence, and the printed IRTI edition (the fuller text, carrying the First-clause risk/defect detail and the Third-clause possession-Hadith reasoning the website abbreviates) is the primary verbatim anchor. This is disclosed rather than overclaimed as 'two genuinely different translations'. TRUST 'high' (numbered/dated PRIMARY OIC resolution verified verbatim in the Academy's official printed edition and re-confirmed on the Academy's own website; sole caveats = read in English translation not the binding Arabic, and the two English publications share lineage as disclosed). DELIBERATELY DROPPED per no-fab: (a) any further clause/recommendation not verified verbatim beyond naming the two Recommendations; (b) any madhab-by-madhab breakdown or vote tally; (c) any hadith number (the possession prohibition is quoted only in the resolution's own words); (d) any OTHER OIC/AAOIFI resolution number; (e) any market/AUM/named-bank figure or claim about which specific AU/UK/CA/US provider does or does not comply (the three tests are given for the reader to apply, no provider graded here). FRESHNESS-HONEST: a 1988 resolution — nothing time-sensitive; its date is stated explicitly, and the muwa'adah/khiyar debate it settles is still the live one. JSON-only per the established article convention (content/articles/*.json feed app/lib/corpus.ts via readdirSync + the /corpus stats badge + Phase-2 retrieval; NOT rendered as individual routed cards), so no SourceCard/route/href added and internal-link integrity is unaffected. Articles 69->70. NEXT candidate: the AAOIFI Shari'ah Standard No. 8 (Murabaha) or No. 30 (Tawarruq) to anchor the standard-setter's own words on these contracts, or IIFA Resolution No. 133 (14/8) on the sale of debt to complement the existing bay' al-dayn entry, or IIFA's ijarah/financial-leasing resolution to anchor the lease-to-own home-finance route — each still needing its own second-source-verifiable pair fetched first. PUNCH-LIST FULLY TICKED; build/lint to be re-confirmed green after this entry; this entry advances the sole live corpus lever AND lands the primary OIC anchor for the contract most of the site's own halal home-finance guidance depends on.
Topics
islamic-financeribamurabahamurabaha-to-the-purchase-orderermurabahah-lil-amir-bish-shiracost-plus-salehome-financehalal-mortgageislamic-home-financewadpromiseunilateral-promisebinding-promisemuwaadahmutual-promisekhiyaroptionpossessionqabdownership-riskrisk-of-losssale-of-what-one-does-not-possesstwo-stage-salesubstance-over-formprohibition-of-ribafinancing-sideoicorganisation-of-islamic-cooperationinternational-islamic-fiqh-academyiifafiqh-academyresolution-40-41primary-sourcecollective-ijtihadshariah-rulingislamic-bankingkuwait-1988
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